US investment firm Tiger Global Management is looking to invest up to $100 million with an option to inject another $100 million in Zomato ahead of a proposed initial public offering (IPO) by the Indian food delivery startup next year.
Zomato and Tiger Global have launched preliminary talks for a total investment of up to $200 million, according to a person familiar with the matter. Due diligence is being done and terms have been discussed though no term sheets have been exchanged yet, said this person, requesting anonymity.
The proposed deal by Tiger Global, which earlier backed ecommerce company Flipkart, ride-hailing firm Ola Cabs, software maker Freshworks, and insurer PolicyBazaar, among others, values Zomato at $3 billion. That is the same valuation Zomato is negotiating for a $100 million investment from existing investor Temasek of Singapore, which is expected to conclude as early as this month-end.
Zomato declined to comment. A PR agency that represents Tiger Global did not immediately respond to an email Moneycontrol sent for comment.
The proposed funding by Tiger Global and Temasek is part of big-ticket investments that Zomato is looking to clinch ahead of a targeted IPO next year, said the person quoted above. The company is aiming to reduce cash burn and show a clear path of profitability, if not outright profits, ahead of the IPO, according to this person.
The potential deals with Temasek and Tiger Global come after an investment in Zomato announced by Ant Financial, a unit of Chinese e-commerce giant Alibaba Group Holding, in January was delayed because of simmering anti-China sentiment and changed foreign direct investment rules.The Gurugram-based online restaurant aggregator and its main competitor Swiggy have struggled like other businesses because of the downturn from the COVID-19 pandemic. It was forced to lay off workers, cut salaries and withdraw from a raft of cities, but has since recast its business, including sharply reducing discounts for food delivery and introducing contactless dining, to survive the economic fallout of the pandemic.